New national carrier unsettles local airline operators, investors - THE GUARDIAN
By Wole Oyebade
• Proposed Airline Yet To Apply For ATL, AOC Four Months To Takeoff.
• New Addition To Bring Government-owned Airlines To Four
• Employing 70, 000 Staff A Mirage – Mshelia
• FG Becoming Regulator, Operator Unfair – Stakeholders
The Federal Government’s newfound zest to float the controversial national carrier, Nigeria Air, next year, has spiked concerns in the industry, in a manner that questions both the feasibility and intent of the high-capital venture.
The hurried April 2022 rollout date has generated both positive and negative vibes in equal measure. In fact, the absence of known technical partners, and the mandatory Air Transport Licence (ATL), as well as the Air Operating Certificate (AOC) being in the works have raised suspicion regarding the birth of a government-protected airline that may circumvent standard procedures and edge unfair competition to get by.
Apparently unsettled by the grim prospect, operators maintain that it would be unfair for the government to be both the regulator and operator, at the same time egg on a “national airline” without transparency.
Conversely, stakeholders that do not share the operators’ pessimism, reckon that it was imperative for handlers of the emerging airline to be transparent, work for national interest, and be clear-headed in choosing the right model that can survive in the post-Buhari era.
The Minister of Aviation, Hadi Sirika, recently announced that the Federal Executive Council (FEC) has approved the new national carrier with April 2022 as the take off date.
Sirika, who has been angling for the carrier since 2016, said with the public-private partnership model the government would have only five per cent stake in the business, Nigerian investors will have 46 per cent equity share, while that of foreign partners is pegged at 49.
He alleged that the airline, which would surpass the Federal Government in job creation, employing about 70, 000 Nigerians, just as it would also serve multiple international routes and Single African Air Transport Market Agenda (SAATM) of the African Union.
The Guardian had earlier reported that the ambitious project lately gained traction with keen interests shown by some potential technical partners and the financial backing of the Federal Government year-on-year.
The airline, being one of the 2015 electioneering promises of President Muhammadu Buhari, has consistently racked up appropriation votes since 2019 to 2022, now summed up to N14.65b. About 40 per cent of the sum (N6.25b) has been channeled to working capital, consultancy and transaction advisers’ fees.
Similarly, findings show that Qatar Airways is in the lead in the technical partnership race that also has Turkish Air and Ethiopian Airlines (ET). Qatar was said to be a better contender given its strong rating, financial strength, modern equipment and global network. ET may be instrumental in setting up a Maintenance Repair and Overhaul (MRO) facility, according to feelers. Sirika, however, said nothing is sealed yet, as the project prepares to enter the procurement stage.
However, investigation by The Guardian showed that the airline was, as at last Friday, yet to submit an application for ATL and AOC, which often take a while to materialise, as it entails scrutinising the entire operation, handlers, and airworthiness of aircraft that will operated.
The Director-General of the Nigeria Civil Aviation Authority (NCAA), Captain Musa Nuhu, in response to The Guardian’s enquiry on the status of the airline (regarding ATL, AOC) said: “They are just starting the process.”
Top officials at the apex regulatory body, however, confirmed nothing on the table yet, even though they vouched that the current NCAA and its committees would not bend the thorough procedure of ATL and AOC approval for any airline. But the operators saw things differently.
According to them, a new national carrier that has no office, staff, equipment, and is yet to be registered less than five months to the commencement of operation underscores the unhealthy desperation of its handlers, as well as the odds stacked against other operators.
Already, the Federal Government, through the Asset Management Corporation of Nigeria (AMCON), has its fingers in Arik Air, Aero Contractors and the controversial startup, NG Eagle. The new addition (Nigeria Air) will bring government-owned airlines to four, out of 11 local airlines.
A former Chief Executive Officer (CEO) of Associated Airlines, Alex Nwuba, said the government that announced the takeoff date is the same government that controls who operates, the condition under which they operate. “They also grant the licences, so they can grant themselves everything that they need.
“We know it (Nigeria Air) is being led by a foreigner despite the brilliant Nigerian skills that exist in the industry, and we know that they government has said that it will operate with wet-leased aircraft, which means that they’ll probably operate under the AOC of the lessor, which could also be Nigerian. As for rush, they’ve been rushing for five years; it appears that this is the final 100-metre dash to the finish line.
“Anyone in the airline business right now must have some plans for the future to do something else. It is clear from the stance of the government that it is taking steps to be successful. The market isn’t deep enough for a national carrier and private airlines. It will be interesting to list the number of countries that have “national” airlines and thriving private airlines,” Nwuba said tongue-in-cheek.
The timing of the project approval is also suspect. After a four-year layover, the government has chosen to rain on the parade of local airlines that are busy acquiring new aircraft to give the sector a new experience.
Akwa Ibom State-owned carrier, Ibom Air, tabled an ambitious request for 10 brand new Airbus 200-300 aircraft. At a market price of $90.5m per aircraft, the bid is worth about $905m in total.
Similarly, Overland Airways placed a firm order for three new Embraer E175 regional jets, plus rights for the purchase of another three. If all purchase rights are exercised, the deal is worth $299.4 million at list price.
Air Peace earlier led the way with a firm order for 13 Embraer 195-E2 and the prospect of additional 17. The fifth of the first batch is currently expected in the country next month.
An airline’s Chief Operating Officer (COO) described the new national carrier as an avoidable “distraction” and a disservice to other operators.
He said: “I think it is uncharitable on the part of the government to, at this time, mull a government-owned airline. Yes, I speak as an operator and one that wears the shoe. I have heard that the government is planning to lease aircraft for that purpose. But that is the same government that has told operators to go get new aircraft for their operations. Three airlines have gone ahead, yet you, the minister/government is doing the opposite.
“How do you think Nigeria will look in the eyes of aircraft manufacturers, local and foreign investors that have chosen to partner with local airlines? What is desperation all about? Political or operational? The entire charade is all garbed in dishonesty. I think the government should focus more on creating a business-friendly environment, and in playing its regulatory function than in being an operator and a regulator at the same time.”
On his part, the Chairman of West Link Airline, Captain Ibrahim Mshelia, reckoned that some projections of the national carrier were not feasible.
Mshelia noted that some large airlines like Lufthansa and KLM actually have large workforce in excess of 100, 000 employees. But the same cannot be said of other airlines “on our level” like Kenya Airways that has 5, 000 or Etihad that has about 14,000.
“How on earth will an airline that is a dream away or a mirage employ 70, 000 people? There has to be transparency in the whole exercise. He (the minister) must be called to order,” he said.
Mshelia added that the process of registering an airline would require a minimum of a 12 months incubation period, which raises a feasibility doubt on Nigeria Air taking off in April 2022.
He said it begins with registering with the Corporate Affairs Commission (CAC) and application for the ATL, if the operation is scheduled in nature.
“We all know that every director has to fill a form because the International Civil Aviation Organisation (ICAO)-recommended practice is that all those who operate airlines must have reputable track records so that we don’t have criminals doing gunrunning, laundering and what have you. Every director on paper must be vetted by the Department of State Services (DSS). They must also complete Personal History Statement (PHS) form and submit same, after which the documents are sent to the DSS that must verify every single claim on it.
“After the vetting, the airline must put out an advert for 28 days for anyone that has an issue regarding licensing of the ATL to the applicant to come up with reasons. There could be court cases going on for months, or years and that should further tell you something.
“All these have to be done before the ATL is obtained so that promoters of the airline can thereafter apply for AOC, and you know how long it takes to get AOC in Nigeria. Of course, those that are involved are not going to rush the process because it is a Nigerian project, and we will not allow that. In addition to that, we are a Category-one country. They should not dare do that otherwise they will lose that status,” Mshelia warned.
Another stakeholder, who did not want to be named intoned that the “noble initiative” began with a wrong footing and has continued in errors that naturally discredit the merits.
“We live in a country where nobody can trust politicians, or the government. The reason is simple; you can easily pick holes in their claims. The minister, a trained aviator and someone that should know should not say that a new airline would employ 70, 000 people and expect Nigerians to clap for him. Even the best airlines in the world don’t have such numbers despite decades of operation. The figures are all in the public domain. So, when you start with a lie, you make nonsense of the whole thing.
“It is unheard of that a government that is borrowing to pay salaries will be funding a national carrier, albeit camouflaging with foreign investment, which has been non-existent. In 2017, a prominent middle eastern carrier rejected the offer of partnership with the Nigerian Air project, and advised the minister of aviation to first go and fix the infrastructure in the industry – terminals, aids, seamless connection between domestic and international flights and so on.
“Fixing the infrastructure and other such steps should be the priority of the minister. Why is he championing the national carrier if the government, according to him, has only five per cent interest? How can he set up a start date without even naming the foreign partners? Who are the local partners? Why has the project failed to fly even after embarking on it for five years? Sirika is Nigeria’s longest serving minister, and has received every financial and budgetary support to succeed, but there’s very little to show for it,” he said.